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China Fund News reporter Fang Li and Zhang Yanbei

Direct banking apps are facing a wave of closures.

Several banks have recently announced thatShut down and integrate its direct banking appsIn this regard, many industry insiders interviewed believe that direct banks face problems such as unclear positioning, insufficient customer acquisition capabilities, and product homogeneity. Many banks choose to close down in order to save costs and integrate resources.

This trend may continue in the future. Except for some small city commercial banks and rural commercial banks, more bank direct sales apps may announce their closure, and the banking industry’s mobile applications will continue to integrate.

Many banks announced the closure of direct banking apps

In recent years, direct banking apps have seen a wave of closures, with Minsheng Bank being the latest to take action.

According to the announcement of China Minsheng Bank, starting from July 15, 2024, China Minsheng Bank will integrate its direct banking APP (mobile application), PC (computer) version and mobile banking APP. With the announcement of China Minsheng Bank to integrate the direct banking APP, all major banks have completed the adjustment of direct banking business channels.

In just over half a month from June 28 to July 15, Hankou Bank, Hami City Commercial Bank, Dongguan Bank, Minsheng Bank and others announced that their direct banking would cease operations and all functions and services would be migrated to the bank's mobile banking APP.

According to the definition of relevant functional departments, direct banking is "a form of banking that uses the Internet as the main channel to provide services to customers through computers, mobile phones, telephones and other electronic service means." In short, direct banking means that there are no offline branches, and the bank builds a "pure Internet platform" on which it integrates its own deposit, loan and remittance business, investment and wealth management products and other services.Compared with personal online banking, direct banking breaks through the limitations of the bank's accounts and can be opened to users of other banks.

Talking about the practices of many banks to adjust their direct banking apps, Ai Yawen, an analyst at Rong360 Digital Technology Research Institute, said that compared with the parent bank's mobile banking app, the bank's internal direct banking app may have insufficient customer acquisition advantages, some functional duplication, serious product homogeneity and other problems. The bank is considering shutting down and may subsequently integrate resources with the parent bank to save some costs.

Yao Xusheng, a wealth manager at Paipai.com, pointed out that there are many reasons for the adjustment of direct banking apps. First, compared with traditional banks, direct banks have a shorter development time, have not yet formed a brand effect, and have a weak customer base. Secondly, the products and services provided by direct banks are highly similar, lacking differentiated competition, resulting in low user stickiness. Thirdly, direct banks and mobile banks have some overlapping functions, and users are more inclined to choose products with more complete functions. Operating and maintaining two systems at the same time not only wastes resources, but also has cumbersome operating procedures and poor customer experience. Finally, most direct banks exist as subordinate departments of the parent bank, and are unable to achieve independent accounting and develop new businesses, which has great limitations.

"Externally, direct banking apps have unclear strategic positioning, low resource inputs, and imperfect assessment mechanisms. Internally, with the rapid increase in Internet customer acquisition costs, direct banking operating costs have also increased, further squeezing profit margins," said a commercial bank official.

The banking industry faces digital transformation

Direct banks have been popular since 2014, with more than 100 of them at their peak, but have been adjusted in batches since 2017. According to incomplete statistics, since 2023, at least 19 banks have announced the removal of direct banking APP services or the contraction of related channels, and some of them have a "lifespan" of only one year.

This change in direct banking not only reflects its own difficulties in positioning and development, but also reflects the strategic adjustments of the banking industry in the process of digital transformation.

Under the wave of Internet finance, direct banks were once regarded as an important supplement to traditional banks, attracting a large number of users with their efficient and convenient services. As Ai Yawen pointed out, the initial development goal of direct banks was to break through the limitations of traditional physical outlets, increase online customer acquisition capabilities, and improve business convenience.

However, as time goes by, direct banks face unprecedented challenges. Ai Yawen and Yao Xusheng both pointed out that, on the one hand, with the popularization of mobile banking apps, the functions and services of direct banks gradually overlap with them, causing their positioning to become blurred; on the other hand, the rapid development of financial technology has made the integration of traditional banking business and Internet technology closer, putting higher requirements on direct banks.

In this context, the batch adjustment of direct banks has become inevitable. This adjustment is not a simple reduction in quantity, but an important layout of the banking industry under the digital transformation strategy. "For banks, to retain and develop direct banking apps, they need to find differentiated advantages in product innovation, special services and channel construction, complement each other with the parent bank, and jointly promote the digitalization process of the banking industry," said Ai Yawen.

Yao Xusheng believes that with the development of Internet technology, banks need to constantly adapt to the new market environment and achieve digital transformation through the application of financial technology.

"In fact, a bank's mobile banking app can basically cover all functions. Mergers and streamlining, as well as reducing redundancy are in line with the general tone of the financial industry to control costs and reduce fees, and improve quality and efficiency." said the above-mentioned commercial bank person.

Direct banking apps may be shut down in the future

Many people believe that the pace of shutting down direct banking apps may continue.

"In the future, some direct banking apps may be shut down, but some city commercial banks and rural commercial banks may continue to retain this model. For these banks, direct banking apps break the limitations of time, space and outlets, can make up for their own geographical limitations, and the operating costs are also lower than those of outlets, and the advantages are obvious." said Ai Yawen.

Ai Yawen further stated that in the future, direct banks need to integrate and optimize to improve user experience and operational efficiency, focus on niche areas, wealth management strategies, competition for existing users and in-depth data mining to adapt to the competitive needs of the digital age.

Yao Xusheng also believes that more bank direct sales apps may be shut down in the future. With the development of financial technology, the banking industry has begun to realize that by integrating online and offline resources, merging bank direct sales apps with mobile banking apps, and creating a one-stop financial service platform, it can provide more efficient and convenient financial services.

In addition, another commercial banker believes that the banking industry's mobile applications will continue to integrate. On the one hand, overly dispersed application layouts may lead to inconsistent user experience and increased maintenance costs, and centralized operation of mobile banking apps will become the mainstream choice; on the other hand, banks need to ensure that all financial products and services comply with the latest regulatory requirements, and business channels such as direct banking apps may also be adjusted.

Editor: Xiaomo

Review: Xu Wen

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